greenguy01
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Delta Sees 'Substantial Loss' In 2005

Thu Mar 10, 2005 10:43 pm

http://biz.yahoo.com/ap/050310/delta_outlook_2.html

Looks like another Legacy Carrier is on the brink of bankrupcy!
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AA7573E
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RE: Delta Sees 'Substantial Loss' In 2005

Thu Mar 10, 2005 10:54 pm

Perphaps it has something to do with their irrational approach to pricing in the face of increased operating and fixed expenses? Way to go Delta, way to go.
See you up front!
 
Thrust
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RE: Delta Sees 'Substantial Loss' In 2005

Thu Mar 10, 2005 10:55 pm

lol, that's funny...they are already losing a substantial amount...and so western civilization in the airline industry crumbles  Wink
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FlyPNS1
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RE: Delta Sees 'Substantial Loss' In 2005

Thu Mar 10, 2005 11:13 pm

Perphaps it has something to do with their irrational approach to pricing in the face of increased operating and fixed expenses?

Yeah....because the old pricing scheme was working so well.  Yeah sure

While Simplifares have temporarily dinged DL's revenues, the larger problem is costs. Had fuel prices dropped into the $30's, we wouldn't be having this conversation right now.

I also believe that DL did not do enough to cut costs. DL is still heavy with management employees. I also think DL should have gotten more cuts from its employees. DL only took the bare minimum cut from the non-union employees in an effort to keep unions off the property.
 
Indy
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 12:24 am

Perhaps its Delta's backwards way of thinking (or perhaps a poorly worded article)

http://www.indystar.com/articles/7/228104-5687-223.html

It says that Delta is "boosting prices on alcoholic beverages and eliminating pillows on many flights as the struggling carrier seeks to improve customer service" . Ok. How is that boosting customer service? Lets charge more and provide less. But it does go on to say that Delta "will replace its food-for-sale program, which was launched on selected flights in July 2003, with a wider assortment of free snacks in coach class on most domestic and some Latin American and Caribbean flights of more than 90 minutes." But this is also the company that provided light beverage service on domestic flights even if you had to sit through hours of delays. But if I recall right the beverage service was expanded again. The initial selection of water, tea, oj and some other juice was just pathetic. Besides those juice bottles had to cost a bit more than a can of soda. So I never understood that move.
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burnsie28
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 12:54 am

Congrats Delta, it looks like those Simplifares are really working...


..dipshits, whoever the idiot is that came up with this should be relieved, hes going to cause the airline to go into a hole that it cant come out of, all at the expense of the employees, including my uncle  Sad
 
TWFirst
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 12:57 am

Delta is admitting it's in real trouble. It doesn't have enough cash to run its operations... and it doesn't have any more unencumbered assets, which means a) it has nowhere to get more money, and b) bankruptcy would not be pretty.

Delta is in REALLY bad shape.

http://www.startribune.com/stories/535/5284591.html
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:13 am

Congrats Delta, it looks like those Simplifares are really working...


DL admitted their new pricing structure would be revenue negative at first, but that it would go revenue positive 12-18 months down the line, IIRC.

While it sounds like a dumb idea, it isn't - the changes in the industry are structural in nature, not cyclical - and that means the low-fare environment isn't going away. As such, EVERYONE needs to find a way to get more people paying higher-yielding walkup fares, so they discount them to the point where the high-yield fares are more attractive to travelers.

For example, DL's walkup fare ATL-LGA was $726.00 one way a few months back. Now, it's a far more attractive $394.00 - and keep in mind, this is the last-seat-on-the-aircraft fully unrestricted walkup fare.

So odds are business travelers who would have balked at $726 might not think twice about $394 - and DL will probably get 4 or 5 of these customers per flight now instead of the MAYBE one customer they used to get at $726.

It just takes time for a structural pricing change like this to take root though, which is why DL projected going revenue-negative at first. Believe me, they wouldn't have gone ahead with the change if they didn't strongly believe there was evidence to support stronger revenues and yields as a result of the change.
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drerx7
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:19 am

Simplifares was a foolish idea--now they are scrambling to cut further costs--so out go the pillows and food for sale--in with the Southwestized snack service. Well, if it wasn't for OnePass mile accrual I would have absolutely no incentive to fly delta over Southwest.
Third Coast born, means I'm Texas raised
 
RNOcommctr
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:21 am

Well, DL is certainly not being helped by its latest asinine touchy-feely "feel good" advertising campaign.

A question: ATL is currently the world's busiest airport in terms of pax: 83 million in 2004. If DL can't do Chapter 11 and has to liquidate, what percent decline in pax would we see at ATL? A huge chunk of ATL's pax has got to be DL connecting traffic, as the ATL O&D population base isn't THAT big-- metro area of about 4 million, I believe.
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FlyPNS1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:22 am

Simplifares was a foolish idea

Why was it so foolish? Under the old pricing scheme DL lost $5.2 Billion dollars....and you call that a success.

Simplifares isn't why DL is having liquidity problems...costs are.
 
Lono
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:27 am

The new pricing structure needs 18 months to be effective for DL.... However what concerns me in this latest news DL admits it does not have even 12 months.... I fear DL will go into B/R and not come out.... which will be very sad indeed... However many saw this coming... DL was too slow in adapting to the new environment....
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TWFirst
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:35 am

I'm not at liberty to say how, but I have access to Delta's 5 year business plan, dated 9/04, which includes the assumptions they used when formulating their cost and revenue projections. I'm reviewing it now. My initial observation: they made some major mistakes in their assumptions... more detailed thoughts to come.
An unexamined life isn't worth living.
 
1MillionFlyer
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:36 am

No ariline the size of DL will be allowed to liquidate. The banks and Leasing companies cannot re-lease or sell 400 airplanes, there is no market. They will bend over backwards to renegoitiate (Look at US and UA), before they start repo-ing planes.

Also, from a government income perspective and economic impact, the gov't will also be keen to keep DL in business (Also like US and UA)


In the scheme of things the Airline CEO's are really working for the banks at this point!
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ATLTraveler
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:36 am

Just goes to show that Airlines are still not doing enough to cut costs. I guess I don't understand. If Revenues are X, Why cant Delta cut costs till they at least reach X. I blame the share holders. They should demand that the board of directors forces wages down in both management and union till the costs are in control. Why the discussion around oil. Its not like there is anything the airlines can do about it. Just adjust that in the costs. It is what it is.
 
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:45 am

I need to ask a very serious question - why are so many people wringing their hands and going into full-on "OMIGOD!" mode over DL?  confused 

Look - US doesn't even have a viable business (apparently no one has bothered to tell them yet), and yet they're STILL around like a bad penny, reinventing themselves time and again while trashing yields for everyone in the process...and odds are they'll still be around for at least another six months.

Now do you honestly believe that Delta Air Lines, a company that actually DOES have a very viable business won't survive going forward?

Their costs are coming down, but - to paraphrase Clinton's famous campaign line - It's their debt, stupid. They're hoping to solve their problems outside of Chapter 11, but if they WERE to enter Ch11 they'd re-emerge as a leaner, stronger company.

Why? Because they've got a viable business that works - just not right now while we're in this "Perfect Storm" of low yields, high fuel costs, etc.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
DAL767400ER
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:52 am



Quoting Atltraveler (Reply 14):
If Revenues are X, Why cant Delta cut costs till they at least reach X.

Because then DL would get into big trouble with DALPA. Just look how long it too DALPA to accept their paycuts. Had DALPA accepted those paycuts sooner, it would have saved Delta millions, if not billions of dollars. What most people also seem to ignore is the fact that pay cuts were companywide, including management. E.g. Grinsteing only made 250K last year. Now compare that number to other airline CEOs, and expecially compare it with the 13 million Mullin made last year. Delta is still on a good way, even though it doesn't look like it now.
Oh, and to Burnsie: Let's not forget that it was your airline that blocked basically all fare hike attempts by other Major's.
 
bucky707
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:02 am

"DL was too slow in adapting to the new environment...."


truer words have never been written. Bottom line for Delta, management there kept thinking the good old days would return until it was too late to make the structural changes they needed to survive in todays market.
 
TWFirst
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:12 am

>>I need to ask a very serious question - why are so many people wringing their hands and going into full-on "OMIGOD!" mode over DL? <<

Ummmm...maybe because the company is wringing its hands and going into full-on "OMIGOD!" mode???.....

"...the company, which has $3.4 billion in obligations in 2005 related to leases, interest on debt, debt maturities and funding of employee pensions, said its fate is uncertain."
An unexamined life isn't worth living.
 
padcrasher
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:15 am

The SEC filing is nothing new.

It makes clear there will be no Chap. 11 fiing in 2005

Simplifares has nothing to do with it.

The cost cutting continues.

Delta still has flexiblity to lower non-contract labor costs.

US Airway's and FLYI's Chapter 7 will stabilize the industry long before Delta is near bankruptcy.
 
NWAFA
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:17 am

Padcrasher,

Yes US Airways will, but not Indy..it will be UA and US that will stabilize the industry.
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padcrasher
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:19 am

Indy? They're worse off than US Airways. They lose 50 cents on the Dollar.
 
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:19 am


"...the company, which has $3.4 billion in obligations in 2005 related to leases, interest on debt, debt maturities and funding of employee pensions, said its fate is uncertain."


The passage in boldface are the media report's words, not DL's. They're not predicting their own demise, the media is.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
TWFirst
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:33 am

>>The passage in boldface are the media report's words, not DL's. They're not predicting their own demise, the media is.<<

Wrong.

The subject of the sentence is "the company". The verb is "said". Thus, "The company said". What did the company say? That its fate is uncertain.
An unexamined life isn't worth living.
 
jacobin777
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:45 am



Quoting 1MillionFlyer (Reply 13):
No airline the size of DL will be allowed to liquidate. The banks and Leasing companies cannot re-lease or sell 400 airplanes, there is no market. They will bend over backwards to renegotiate (Look at US and UA), before they start repo-ing planes.

here is the quote from the startribune.com article:

""A restructuring under Chapter 11 of the U.S. Bankruptcy Code may be particularly difficult because we pledged substantially all of our remaining unencumbered collateral in connection with transactions we completed in the December 2004 quarter as part of our out-of-court restructuring,'' Delta said in the filing"

they do not have too many assets left...they have already pledged them away, i.e., the creditors probably own most of Delta's assets already......
"Up the Irons!"
 
FlyPNS1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:52 am

A restructuring under Chapter 11 of the U.S. Bankruptcy Code may be particularly difficult because we pledged substantially all of our remaining unencumbered collateral in connection with transactions we completed in the December 2004 quarter as part of our out-of-court restructuring,

This is one place where DL is in worse shape than UA/US. UA/US still had some assets to pledge when they went CH11. DL already pledged most of their assets when they avoided CH11 last fall. Now, if DL is forced into CH11, it could be ugly.
 
OttoPylit
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:03 am



Quoting FlyPNS1 (Reply 3):
I also believe that DL did not do enough to cut costs. DL is still heavy with management employees. I also think DL should have gotten more cuts from its employees. DL only took the bare minimum cut from the non-union employees in an effort to keep unions off the property.

Being that your not a Delta employee, I don't expect you to understand. The worries of a union coming onto the property is the least of Delta's worries right now. 71% of Delta flight attendants voted down the AFA in 2002 after the largest union organizing drive in history. 85% of Delta groundcrews voted away the TWU in 1999. So having a union want to come in and take union dues from employees already taking a paycut is highly unlikely.

However, Delta management is interested in not letting employee morale slip any lower than it has to. Its a well known fact that low employee morale = poor customer service. I can say I have yet to see a US Airways employee that is happy and cheerful. With Delta reinventing the airline industry with the Simplifares, it needs happy employees to provide good customer service.

The fact is that Delta is looking to lower costs without turning to slashing employee costs. Taking paycuts is only ever a temporary way at staving off high costs, because they creep up again. Delta needs to focus on cutting costs inside the company and increasing revenue. There is a saying in this industry, "No airline has ever saved itself to profitability." You can save some money by taking it from your employees, but your not gonna get anything out of it. Delta got 1 Bn in concessions from the pilots, which was definately needed. It only took 10% from the rest of the company, from the top management on down, so that we were all giving into saving the company. There would be no need into taking anymore unless it was an absolute last resort and there was no way out. How many paycuts have those poor guys at US dealt with?

So your throught process on unions and bare minumum cuts really have nothing to do with what Delta wants to do and needs to do. Besides, Continental is doing better than Delta right now, but still on hard times, and they only took 10% from their employees, the bare minumum, and they are unionized, aren't they?


We must all remember that when Delta imposed Simplifares, everyone, including airline analysts and Delta, said that the revenue would be negative at first, but positive in the long run. With fuel about to boost up, Delta's forecasts don't look good. I think the cost of fuel is the one thing that will determine whether Delta does or does not seek BK. Delta's current forecasts are looking at the negative revenue from Simplifares and higher gas prices. If that remains so, then Ch 11 may be the best choice for restructuring.

Despite what many have said, Simplifares are not the problem, they are more along the line of the answer. Its costs that are the problem, that is one thing that I can agree with you on, FlyPNS.
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
padcrasher
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:21 am

When push comes to shove. Additional paycuts should and will be on the table. US Airway's predicament is also due it's small size and lack of a viable nationwide route system. Paycuts will not save them but that does not mean paycuts will not help Delta.
 
FlyPNS1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:24 am

There would be no need into taking anymore unless it was an absolute last resort and there was no way out.

Unfortunately, I believe DL may be rapidly approaching that point of last resort...unless something changes soon.

I'm not saying employee pay cuts are a cure-all....they certainly aren't. However, DL is going to struggle to survive if it continues to have some of the highest employee costs in the industry, while operating one of lowest yielding networks among the majors.

DL's network is inherently lower yielding...due to DL's large reliance on connecting traffic (particularly at CVG/SLC) and high reliance on Florida. To offset this, DL must have costs that are lower than most. So far, DL has failed to do this.

I agree that morale is very important. But I can't imagine seeing DL constantly bleed red ink and reading reports of impending BK is doing much for DL's employee morale either.
 
PVD757
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:45 am

Quick and painful (for DL employees), but if DL really wants to be proactive in the industry i.e.Simplifares, etc., they need to downsize a bit. They cannot control the cost of fuel and have already hit the employees for give-backs, so it's time to trim the fat from the operation. They have announced the phasing out of certain types of aircraft over the next couple of years. Well, what was the next couple of years is quickly becoming NOW! The 732's, M90's, 733's, and the 762's need to go now. They can't continue to operate the size network they have with this many fleet types. The painful side of this is reducing flying (and the parallel employee needs to support that flying) and the loss of service to many smaller markets. With those fleet types gone, service will need to shift. CVG to anywhere that already isn't CRJ flying needs to go the way of the RJ with the exceptions of BOS/NYC/WASH/ATL/SLC/Florida/West coast. Yes, this idea would include the PVD's, BDL's, and MHT's of the world. Tough times call for tough decisions. The phase out the mentioned aircraft would also reduce ATL flying accordingly. Stay with the high-use, de-banked concept, but remove the 732s, etc. and shift the capacity up. What was 6x (1 757, 5 M80) daily to ATL from PVD, goes to 5X M80. What is 3X MHT-ATL (2 M80, 1 CRJ) goes to 3X CR7, etc. Sorry, but the HVN's and the SCE's of the DL world need to go. ALL 757's should become SONG. If DL insists on the current fare system, then they must maximize the product that works best with the fares. All non-hub FLL/MCO/TPA/RSW/LAS/MSY flying needs to be SONG (this is probably already the case. The 764's and 763's need to be less used in the short haul domestic market. A 764 has too many $99.00 seats to fill to MCO in my opinion. DL just needs to really look at it's network and make some tough decisions...

Keep in mind, I'm the kind that is constantly looking to see what airlines are ADDING, this is just my opinion on how to help DL survive. If it were up to me PVD would be all 762's to ATL, but I know that just is silly!
 
FlyPNS1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:56 am

Well, what was the next couple of years is quickly becoming NOW! The 732's, M90's, 733's, and the 762's need to go now.

There are two problems with this:

1) Many of these planes (732's, 733's) are leased. If DL dumps them, they still have to pay the leases.

2) The type of shrinkage you are promoting would drive DL's unit costs upward. This would make DL simply a smaller carrier with higher costs....shrinking yourself to profitability is rarely successful. USAirways has reduced its mainline fleet from 411 (pre-911) down to 282 (and still dropping). As you can see, it hasn't done much for them. Despite all the concessions and cuts, USAirways unit costs are still high because they have to spread those costs over fewer and fewer aircraft.
 
TWFirst
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 4:12 am

Interestingly, as of 6 months ago, Delta's plan was to elimnate the 732 by 07, the 733s by the end of this year, and take delivery of 90 73Gs and 16 739s through 09. The 762s were to be gone by 07, but they were NOT planning to eliminate any of the MDs (88 or 90).
An unexamined life isn't worth living.
 
SHUPirate1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 4:19 am

Here's a question, one that is probably going to be rejected out of hand, but a question nonetheless.

What if Delta decided to put those 767-400's into Song configurations, and have them fly as Song? After all, those planes fly primarily leisure routes anyway.
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padcrasher
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 4:24 am

There are just not alot of markets where a larger plane would work. The 757 is a bit oversized right now. The ideal aircraft is in the 160 seat range.
 
SHUPirate1
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 4:35 am

Padcrasher-What about ATL-FLL, ATL-LAS, ATL-MCO, ATL-TPA, and all of the Hawaii routes...do that, and convert the remainder of the 757's to Song and fly them on the high-density leisure routes like CVG-LAS, etc...would anybody know how many seats a 767-400 in a Song configuration (33 inch pitch or so, no first class) would fit?
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
QuestAir
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 5:13 am

Perhaps they could change their slogan to 'Bankruptcy Goes Around'.
'Do we carry rich people on our flights? Yes, I flew on one this morning and I�m very rich.' - Michael O'Leary
 
PVD757
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 6:42 am

FlyPNS: if DL is losing that much flying around those planes, then parking them may be cheaper. The lease payments alone might be less than the related maintenance + crew costs + ground equipement + FUEL. Not to mention the savings in training and maintenance supply and storage for those fleet types. USAirways shrunk but didn't close hardly any stations. Their costs to operate out of every other market are still there. A true shrinkage would eliminate cities that just don't profitably support DL service. These actions would not drive up unit costs at all, as:

a) the increase in seats per 757 (mainline to SONG) would offer very little marginal cost versus marginal revenue per ASM

b) the better utilization of widebody (high seat capacity aircraft) on longer routes would spread costs over more ASMs (longer flights/legs), therefore reducing unit costs.

c) the significant reduction in OPERATING costs for the retired aircraft combined with a & b would significantly lower unit costs. More importantly the reduced flying, less employees, less overhead would offer huge OPERATING costs - which just so happens to be where DL is having problems (cash flow).

Fuel is a huge problem right now, so less flying = less fuel burn = less writing checks to OPEC. DL can carry more pax on a SONG 757, for almost the same costs, than a mainline 757, over the same number of miles. Let's not forget that the 732's are anything but fuel efficient too!

This is better than:

a) doing nothing and continue to lose money, passengers, and employee morale (ala UA)

b) going to the workforce and asking for several rounds of concessions while not truely changing the way you operate the airline (ala US)
 
DAL767400ER
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 7:08 am



Quoting TWFirst (Reply 31):
Interestingly, as of 6 months ago, Delta's plan was to elimnate the 732 by 07, the 733s by the end of this year, and take delivery of 90 73Gs and 16 739s through 09. The 762s were to be gone by 07, but they were NOT planning to eliminate any of the MDs (88 or 90).

Might I ask where you got those numbers, especially the 'as of 6 months ago'?
AFAIK, DL never place orders for 73Gs nor 739s, only 738s. And about the retirment, I remember a news release by DL several years ago that mentioned that both MD-11s and MD-90s would be phased out by 2009, and all 732/733s to be retired by 2007, with no retirement date mentioned for the 762.
 
scotron11
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 7:11 am

Where is the money going? We are now 3 1/2 years past 9/11, TWA is gone, so how do you lose $5.2Billion dollars in one year? And it's still not enough.

Something is definitely wrong somewhere. Maybe it's time to go back to being a purely domestic operation. Either that or drastically reduce their schedule.
 
MD-90
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 9:40 am

Quoting Scotron11 (Reply 38):
Maybe it's time to go back to being a purely domestic operation.

Huh? The trans-Atlantic shuttle service (almost) that Delta operates is what's keeping them afloat right now. And the money is buying Jet A at very high rates.
 
skibum9
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 9:55 am

Quoting PVD757 (Reply 29):
CVG to anywhere that already isn't CRJ flying needs to go the way of the RJ with the exceptions of BOS/NYC/WASH/ATL/SLC/Florida/West coast. Yes, this idea would include the PVD's, BDL's, and MHT's of the world. Tough times call for tough decisions

This idea is rediculous. The RJ, in particular the RJ-50s have some of the highest CASM of any plane flying today. They need to dump all those RJs and stop throwing frequency at everything.
Tailwinds!!!
 
alb222
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 10:02 am

DL will sell Comair and ASA. This will bring in much needed cash and lowered costs. Asset sales are a viable recourse. DL can sell both of these airlines and not see any change in their connection operation...............
 
PVD757
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 11:15 am

Skinburn: It's not rediculous at all, take a look at the fare premiums DL gets on it's CVG routes. Reducing seat capacity by using the RJs will help limit the amount of super discounted fare inventory and outright empty seats in/out of the CVG hub. CO does the same thing at CLE. To top it off, the RJ flying is technically not done by DL, it's via 2 wholly owned and contract flying. Selling the wholly owned carriers (like what we've heard they are trying to do) will get the RJ stuff of the balance sheet completely.


"They need to dump all those RJs and stop throwing frequency at everything."

Funny, if you read my two posts, I've indicated that they need to reduce flying several times. This would include SOME frequency. DL needs to maintain as much frequency as a market will allow, but with the right level of seat inventory. In case you haven't heard, much more of today's airline customer shops for price and then schedule/frequency. What do you suppose would happen if DL reduced frequency on the ATL-FLL or MCO or TPA or wherever??? I bet FL knows!!!

Please make an attempt to do some research before you call someones ideas rediculous...
 
Midway2AirTran
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 12:02 pm

Quoting OttoPylit (Reply 26):
With Delta reinventing the airline industry with the Simplifares, it needs happy employees to provide good customer service.

I agree with the happy employees needed, but Delta did no reinventing with Simpli-fares. They took the basic LCC pricing model and tweaked it by increasing the lowest fares to get higher yeilds.

The effect on the industry was nothing but the very typical reaction of the other Legacy carriers, they copied off and followed Delta's lead. Even with that said, it was a good move on DL's part but they should have done it years ago.

Since Delta has waited so long to make these changes, DL now deals with a better LCC airline eating them alive in their own backyard in ATL. Not to say other similar competition in other areas.
"Life is short, but your delay in ATL is not."
 
skibum9
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 1:06 pm

Quoting PVD757 (Reply 42):
take a look at the fare premiums DL gets on it's CVG routes. Reducing seat capacity by using the RJs will help limit the amount of super discounted fare inventory and outright empty seats in/out of the CVG hub.

If you recall, DL introduced Simplifares first at CVG, because much of the CVG O&D were driving to nearby airports like DAY, LEX, IND, CMH and SDF. This was because DL was charging a premium. Now that Simplifares is in place, O&D has picked up significantly at CVG. If you reduce the discounted airfare at the CVG market, the O&D traffic will just revert back to the nearby airports. Also, if you look at people connecting through CVG, the fare structures a fairly comparable to other routes through a hub on a legacy carrier. So by removing the inventory, you will decrease revenue.

Quoting PVD757 (Reply 42):
CO does the same thing at CLE

I don't think your CO example at CLE is an apples to apples comparison, as CLE does not have the same market dynamics. CLE has LCCs, namely WN, where as CVG does not. So that keeps the fares down on routes where CO competes with WN. Further, the only other airport in close proximity to CLE as CAK, so while they have some O&D leakage, it is no where near the degree that CVG was experiencing pre Simplifares.

Further, you talk about empty seats at CVG. Where is your substantiation? I fly in and out of CVG regularly, and I would have to say loads look pretty high on DL. When non-revving, there have been times when I can't event get on a flight. The only flights that I have seen that may be a little light are on OH, like the hourly runs between CVG and YYZ, or like you say, SCE. This is where I will agree with you that frequencies need to be adjusted and some of these small cities eliminated. But I just cannot agree to your assessment that everything, with the exception of a few destinations, at CVG should be on the RJ.

Let's consider another point, Independence air is attempting a similar model, using RJs to most destinations, and bringing in some 320s and 319s for longer or higher demand markets. Yet, even with low fares, their loads in the the 40s....terrible. This would point to the conclusion that the RJ is just not a viable plane to build a solid route structure and should be left for what it was meant to be, a feeder from thin markets.

But lets face the facts, we can sit here and be armchair CEOs all you want. I highly doubt that your or my opinion would make a difference to DL and their immediate problems. DL has real trouble as a result of their debt and lack of liquidity. By the time they instituted anything that resembles what you suggest and realize any benefit, if any, it will be too late. Given the amount of debt they have, it appears that cost cutting will not generate enough cash to even service their debt. While selling OH and ASA would give them a much needed injection, the market cap for those entities is not that high, thus much more needs to be done to deal with the debt problem.

I wish DL and its employees the best of luck. I have given them about all my business over the past decade, averaging 100k miles a year, and know they are good people. Too bad they had such poor leadership with Ron and Leo.
Tailwinds!!!
 
OttoPylit
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RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:14 pm

Quoting Alb222 (Reply 41):
DL will sell Comair and ASA. This will bring in much needed cash and lowered costs. Asset sales are a viable recourse. DL can sell both of these airlines and not see any change in their connection operation...............

If I were you, I wouldn't bet any money on that statement. Do not expect to see Delta sell ASA and Comair. As I said in another statement, Delta has discussed the possibility and pros and cons of selling EV and OH, but the loss outweighs the gain. It gets DL a few more bucks at first(probably more like 2 billion), but DL will lose in the end because of it. Delta pays Skywest a fee per departure basis, meaning that Skywest makes money, whether they carry 1 or 50 people. Whereas Comair and ASA do not have that luxury. So it does not matter if the route makes money or loses money for DL, OO makes money. If DL were to sell EV and OH outright to OO, then they would eventually have to start paying that fee per departure cost twice more, rather than what the route actually carries.

Too many people are speculating on something that was not supposed to end up in the press, but someone at Skywest opened their mouth. Airlines always talk about selling off subsidiaries to see what they are worth, without ever making it public.

Quoting Midway2AirTran (Reply 43):
Delta did no reinventing with Simpli-fares. They took the basic LCC pricing model and tweaked it by increasing the lowest fares to get higher yeilds.

Delta's new pricing is similar to LCC pricing, but not the same. But it is re-inventing. No longer will the legacy carriers be hoping to make money off those high yield last minute passengers. Delta just ditched the rediculous kind of pricing that drove customers away, such as Saturday night stays, etc. They can now take on LCC's head to head, with a leaner way of pricing and adjusting. It is causing everyone to follow suit, meaning that most other airlines see the point and doing the same, therefore reinventing the way the airlines have always done business.

Quoting Midway2AirTran (Reply 43):
Since Delta has waited so long to make these changes, DL now deals with a better LCC airline eating them alive in their own backyard in ATL.

Really? Where? If you are referring to FL and them eating DL alive, then how come they are having to focus on more point to point routing? Could it be because FL finally noticed there is no room in ATL for them to grow? I don't see Airtran entering all of Delta's markets and taking all of their revenue. In fact, all I see is Airtran refusing to enter markets unless the local governments pony up subsidies ensuring a profit for FL. Kinda sounds like a certain airline is using a profitability crutch to me, because they know that they can't enter a market and be able to sustain the loss while waiting for traffic to pick up. And that makes them better? More like parasitic. But there is no accounting for taste, fortunately for you.
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 2:55 pm

Quoting MD-90 (Reply 39):

Huh? The trans-Atlantic shuttle service (almost) that Delta operates is what's keeping them afloat right now. And the money is buying Jet A at very high rates.

Let's assume that is so. The question still remains, where do you lose $5.2Billion? Something is not right somewhere. And I don't beleive DL is operating on the assumption that when traffic picks up they'll be ok. Or when this or that carrier goes Chap 7 we'll be ok. If they're making money on a route, keep it. If they're not, ditch it!
 
bigb
Posts: 731
Joined: Fri Nov 07, 2003 4:30 pm

RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 3:30 pm

Hey Otto
If DL were to sell EV and OH outright to OO

Who said Skywest were going to buy EV and OH. If Delta was putting EV and OH out on the market for sale, look for there stocks to be traded in the NYSE.

Really? Where?

Can you say B6 at BOS and JFK buddy  Wink

If you are referring to FL and them eating DL alive, then how come they are having to focus on more point to point routing? Could it be because FL finally noticed there is no room in ATL for them to grow?

The last thing Delta wants is for FL to expand further at ATL. Trust me  Wink
ETSN Baber, USN
 
padcrasher
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Joined: Tue Aug 10, 2004 6:17 am

RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 4:54 pm

bb your post makes no sense. In order for ASA/Comair to be sold it would not need to involve the NYSE.
 
bigb
Posts: 731
Joined: Fri Nov 07, 2003 4:30 pm

RE: Delta Sees 'Substantial Loss' In 2005

Fri Mar 11, 2005 5:13 pm

Ok padcrasher, your right, I was bit dosed up on some sinus medicine, but the selling of Comair and ASA wouldn't necessarily be sold to Skywest.
ETSN Baber, USN

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